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Brexit update: impact on trademarks and designs

Although some time has passed since the UK's vote to leave the EU, the full implications of Brexit for trademarks and designs remain unclear. Statements made by EU and UK officials have not changed that position, nor did Theresa May's Brexit speech in January 2017 provide any indication what path the UK may take with respect to EU trademarks and Community designs. The UK Government's White Paper entitled "United Kingdom’s exit from and new partnership with the European Union" published on 2 February 2017 is equally silent on this issue. It is hoped that more clarity will be gained in the months after the UK government triggers Article 50 on 29 March 2017.

The factual and legal situation therefore remains unchanged and can be summarized as follows:

The outcome of the referendum has no immediate consequences on EU trademarks and Community designs as the vote itself does not affect the legal position of the UK as an EU member state. EU trademarks as well as Community designs therefore continue to provide the same scope of protection to rights holders in the UK. It also remains possible to apply for new EU trademarks and registered Community designs which extend protection to the UK and there will be no changes for legal proceedings involving EU trademarks and Community designs initially.

There is no doubt that the status of EU trademarks and Community designs will be among the topics covered during the exit negotiations once these begin. As for many other areas, much will depend on the outcome of those negotiations. However, based on current EU legislation, EU trademarks and Community designs would no longer cover the territory of the UK once the UK leaves the EU.

There is a lot of ongoing discussion between stakeholders about the fate of EU trademarks and Community designs. The Chartered Institute of Trademark Attorneys (CITMA) has outlined some of the options that may be chosen. These include The Republic of Ireland Model (where owners of EU trademarks would have the option to create a corresponding UK trademark registration for a limited time period (e.g. five years after Brexit) or when renewing the EU trademark, the Jersey Model (where the UK would unilaterally deem EU trademark to have effect in the UK), the Montenegro Model (where all existing EU trademark registrations would be automatically entered onto the UK trademark register as UK trademark registrations retaining the same scope of protection) and conversion. These are not the only options that exist, and there are also several possible variations. Although not absolutely certain, it is anticipated that the UK will offer the ability to convert an EU trademark or create an equivalent national counterpart for existing EU trademark registrations. Regardless of which option is ultimately chosen, presentations from the German, Norwegian, ex-Yugoslav and US perspective at the CITMA Spring Conference, which took place from 15 March to 17 March 2017, provide hope that the UK will be more than capable of offering brand owners the necessary protection for their existing and future trademark rights and that the UK will continue to be an attractive jurisdiction in which to do business.

Potential impact

If the UK leaves the EU, neither Community designs nor EU trademarks will cover the territory of the UK. It is anticipated that the UK will permit owners of such EU rights to request a conversion of their EU registrations into national UK registrations. Such national UK registrations may also retain the original filing date of the EU rights. Beyond these assumptions, much remains unclear at the moment. Will the UK Intellectual Property Office (UK IPO) simply accept the list of goods and services of the prior EU trademark or will there be a new examination process, as would be the case currently where rights holders decide to convert their EU trademarks into a bundle of national rights? Which fee structure will be applied for the conversion process? How long will the conversion process take? Will the "new" national UK trademarks be subject to (another) opposition period? The UK IPO may also ask the applicant to either prove the use of their mark in the UK or request that the applicant declare a bona fide intention to use the mark in the UK, as is currently required when applying for an UK trademark. Some concern has also been raised as to whether EU trademarks might become subject to non-use cancellations once the UK leaves the EU.

Owners of EU trademarks and registered Community designs who make use of the national UK filing system will not need to alter their current filing strategies. However, brand owners who have no parallel registrations in place and regard the UK market as relevant may need to reconsider their filing strategies.

Further considerations

The effect of Brexit on legal proceedings involving EU trademarks and Community designs will also need to be clarified during the exit negotiations. Whereas judgments in legal proceedings post Brexit involving EU trademarks and Community designs will no longer be binding on the UK, it will be interesting to see how the scope of protection of already binding judgments with EU-wide applicability is assessed with respect to the UK after the exit.

Actions

No immediate consequences for EU trademarks and Community designs as the scope of protection of these rights remains unaffected for the time being

Continue to follow Brexit discussions to learn about a potential conversion process for existing EU trademarks or registered Community designs

Rights holders with a particular interest in the UK may want to consider national UK applications for trademarks and designs, in particular for their core brands, to avoid uncertainties in upcoming exit negotiations

Be specific about what is meant by referring to "the EU" when entering into licensing or settlement agreements, by clarifying whether the UK is to be included

The statistics on trademark filing figures for September 2015 to September 2016 recently published by the UK IPO show that brand owners around the globe appear to be adopting a "wait and see" approach when it comes to filing UK trademark applications. Around 63,500 applications were filed during this period. In September 2016, the IPO received 5,390 new trademark applications, representing an increase of around 800 applications compared with around 4,560 trademark applications filed in September 2015. These figures suggest that the IPO has seen a rise of roughly 10% in applications. Considering the potential implications of Brexit on trademark rights in the EU and UK, this increase does not appear to be hugely significant.

We will continue to monitor developments closely and will provide timely updates as soon as the legislative position is addressed by the UK and EU authorities.